Confidence among German firms unexpectedly improved to the highest since 2022 after the European Union struck a trade deal with the US, despite some criticizing higher tariffs.

“Companies are mostly hoping for things to get better,” Ifo President Clemens Fuest told Bloomberg TV on Monday. “But if we look at order intake and other current indicators, hard facts, we are not there yet.”

The survey offers hope that Germany can stage a revival after two years of recession following Russia’s war in Ukraine. S&P Global’s Composite Purchasing Managers’ Index for August showed private-sector activity in Europe’s largest economy unexpectedly quickened.

The poll will be welcomed by Chancellor Friedrich Merz, who’s struggled to deliver on pledges to reignite growth by cutting red tape, overhauling the labor market and bolstering domestic consumption.

“We’re not just in a period of economic weakness, we are in a structural crisis of our economy,” Merz said Saturday in a speech. “This task is bigger than one or the other may have imagined a year ago.”

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